Download - Session - Foundations of Planning
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FOUNDATIONS OF PLANNING
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Are you a good planner?
Mostly True Mostly False1. I have clear, specific goals in several
areas of my life.
2. I have a definite outcome in life I want to
achieve.
3. I prefer general to specific goals.
4. I work better without specific deadlines.
5. I set aside time each day or week to
plan my work
6. I am clear about the measures that
indicate when I have achieved a goal.
7. I work better when I set more
challenging goals for myself.
8. I help other people clarify and define
their goals.
If you fail to plan, you plan to fail.
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Give yourself a point for each item you markesas Mostly true except items 3 & 4.
A score of 5 or higher suggests a positive level
of goal-setting behavior and good preparation
for a new manager role in an organization.
If you scored 4 or less you might want to
evaluate and begin to change your goal-setting
behavior.
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Definition of Planning
Defining the organizations goals, establishingan overall strategy for achieving these goals,
and developing plans for organizational work
activities.
Planning is concerned with ends (what is to be done)
as well as with means (how it is to be done).
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How Do Managers Plan?
Elements of PlanningGoals
Desired outcomes for individuals, groups, or entire
organizations
Provide direction and performance evaluation criteriaPlans
Documents that outline how goals are to be accomplished
Describe how resources are to be allocated and establish
activity schedules
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Reasons for Planning
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Overview of Goals and Plans
A goal is a desired future state that theorganization attempts to realize
A plan is a blueprint for goal achievement
There are different levels of planning and goals
in an organization
Goals at each level of the organization guide the
organization
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Why Planning IsImportant?
Planning ascertains where theorganization is nowand decidingwhere it will be in the future.
Participation: all managers areinvolved in setting future goals.
Sense of direction and purpose:
planning sets goals and strategiesfor all managers.
Coordination: plans provide allparts of the firm with
understanding about how their
systems fit with the whole.
Control: Plans specify who isresponsible for theaccomplishment of a particular
goal.
Planning may create rigidity. Plans cant be developed for a
dynamic environment.
Formal plans cant replace intuition
and creativity.
Planning focuses managers
attention on todays competition,
not on tomorrows survival.
Formal planning reinforces
success, which may lead to failure.
Criticism to Planning
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Levels of Goals/Plans and their Importance
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The Organizational Planning Process
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Goals Desired outcomes
Financial goals
Wider profit margins
Higher returns on invested capital Rise in stock price
Stable earnings
Strategic goals
Large market share High industry ranking
Low costs related to customers
Leader in technology and innovation
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Organizational Mission
A broad declaration of an organizations purpose
that identifies the organizations products and
customers and distinguishes the organization
from its competitors. The mission statement is the reason the
organization exists
Top of the goal hierarchy
Describes the values, aspirations and reason for being
A well-defined mission is the basis for all other goals
Mission statements outline the stated purpose
and values to stakeholders
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Examples of Mission Statements
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How about identifying/defining Mission,Vision and Values based on thereading?
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Hierarchy of Goals
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Strategy
Source:Arit Gadiesh and James Gilbert, Frontline Action,Harvard Business Review, May 2001, p. 74.
COMPANY STRATEGIC PRINCIPLE
America Online Consumer connectivity firstanytime, anywhere
Dell Be direct
eBay Focus on trading communities
General Electric Be number one or number two in every
industry in which we compete, or get out
Southwest Airlines Meet customers short-haul travel needs at farescompetitive with the cost of automobile travel
Vanguard Unmatchable value for the investor-owner
Wal-Mart Low prices, every day
The cluster of decisions and actions that managers take
to help an organization reach its goals.
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Types of Goals and Plans
Strategic Goals official goals, broad statementsabout the organization
Define the action steps the company intends to attain
The blueprint that defines activities
Tactical Goals help execute major strategic plans
Specific part of the companys strategy
Plans of the divisions and departments
Operational Goals results expected fromdepartments, work groups, and individuals
Lower levels of the organization
Specific action steps
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Example of GM
Strategic Goals
Increasing U.S. Market Share to 20 percent
Tactical Goals
Enhance reputation of GMs most important brand
ChevroletChevy moved from 9th to 4thposition by 2010
Operational Goals
Chevrolets marketing dept. might have an
operational goal of increasing customer visits toshowroom by 10 percent by year end
Transportation dept. may have the goal of improvingontime delivery of cars and trucks to dealers by 20
percent
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Strategy Map: Aligning Goals into Hierarchy
Vision: By 2020, become the leading company in our industry
Goals should beconsistent andmutually supportive
The achievement ofgoals at low levelspermits theattainment of high-level goals
Individuals, teams,and departmentsshould be working inconcert
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Types of Plans
BREADTH TIME SPECIFICITY FREQUENCYOF USE FRAME OF USE
Strategic Long term Directional Single use
Tactical Short term Specific Standing
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Planning: Focus and Time
Strategic plans Plans that are
organization-wide,
establish overall
objectives, and
position an
organization in terms
of its environment
Tactical plans
Plans that specify the
details of how an
organizations overall
objectives are to be
achieved
Short-term plans
Plans that cover less
than one year
Long-term plans
Plans that extend
beyond five years
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Strategic vs. Tactical Plans
Strategic plans Apply broadly to the entire
organization
Establish the organizations
overall objectives
Seek to position the organization
in terms of its environment
Provide direction to drive an
organizations efforts to achieve
its goals.
Serve as the basis for the tactical
plans.
Cover extended periods of time
Are less specific in their details
Tactical plans Apply to specific parts of the
organization.
Are derived from strategic
objectives
Specify the details of how the
overall objectives are to beachieved.
Cover shorter periods of time
Must be updated continuously
to meet current challenges
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Directional vs. Specific Plans
Directional plans
Flexible plans that set
out general guidelines
Go from here to there
(outcome-focus)
Specific plans Plans that have clearly defined
objectives and leave no room
for misinterpretation
What, when, where, how much,and by whom (process-focus)
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Single-Use vs. Standing Plans
Single-use plansA plan that is used to
meet the needs of a
particular or unique
situation
Single-day sales
advertisement
Programs: integrated
plans achieving specific
goals.
Project: specific actionplans to complete
programs.
Standing planA plan that is ongoing
and provides guidance
for repeatedly
performed actions in an
organization
Customer satisfaction
policy
Policies are generalguides to action.
Rules are formalwritten specific guides
to action.
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Single Use vs. Standing Plans
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Contingency Factors in Planning
Degree of environmental uncertaintyStable environment: specific plans
Dynamic environment: specific but flexible plans
Length of future commitmentsCurrent plans affecting future commitments must be
sufficiently long-term to meet the commitments
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Planning for a Turbulent Environment
Contingency Planning plans for emergencies,setbacks or unexpected conditions
Building Scenarios visualizing future
possibilities
Crisis Planning preparing to cope with
unexpected events
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A Well-Designed Goal
Written in terms of outcomes rather than actionsMeasurable and quantifiable
Clear time frame
Optimally challengingWritten down
Clearly communicated
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Goal Setting: Management by Objectives
Management by Objectives (MBO)Defined by management scholar Peter F. Drucker in
his 1954 book, The Practice of Management
A system in which specific performance objectives
are jointly determined by subordinates and theirsupervisors, progress toward objectives is periodically
reviewed, and rewards are allocated on the basis of
that progress.
Links individual and unit performance objectives at alllevels with overall organizational objectives
Focuses operational efforts on organizationally
important results.
Motivates rather than controls
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Steps in a Typical MBO Program
Specific objectivescollaboratively set
with employees
Objectives allocated to
divisional and
departmental units
Action plansimplemented
Give Rewards forAchieved Objectives
Jointly Set Objectives
Overall objectives
and strategies of
organization
Develop Action Plans
to Achieve Objectives
Managers andemployees work on
action plans together
Review Objectives andProvide Feedback
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MBO Benefits and Problems
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Levels of Planning
Corporate-Level PlanTop managements decisions pertaining to the
organizations mission, overall strategy, and structure.
Provides a framework for all other planning.
Corporate-Level Strategy
A plan that indicates in which industries and national
markets an organization intends to compete.
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Levels of Planning
Business-Level PlanDivisional managers decisions pertaining to divisions
long-term goals, overall strategy, and structure.
Identifies how the business will meet corporate goals.
Business-Level StrategyA plan that indicates how a division intends to
compete against its rivals in an industry.
Shows how the business will compete in market.
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Levels of Planning
Functional-Level PlanFunctional managers decisions pertaining to the
goals that they propose to pursue to help the division
attain its business-level goals.
Functional StrategyA plan that indicates how a functional department
intends to achieve its goals.
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Levels of Planning at General Electric